Better-than-expected Q1 volume, suggesting that the recovery is on track, at least in North America and Asia. Europe should continue to be the main drag in Q2, while market conditions are expected to improve gradually in H2.
Companies: Heineken NV
Missed FY20 results and cautious FY21 and mid-term guidance. Rather disappointing, especially after Carlsberg’s relatively good results last week, but they certainly reflect the different geographic and on-trade exposure (to the disadvantage of Heineken).
Q3 comfortably beat the consensus volume expectations, but the directional-only guidance doesn’t give any visibility. Q4 will remain challenging.
The month of March drove down Heineken’s Q1 Beer volume. Q2 is expected to be worse and no major improvements are expected in H2. A dark year for the brewers. The strong balance sheet and liquidity protect the business’s continuity but have not spared the interim dividend.
Having faced an unexpected slowdown in profitability due to significant input cost inflation, and finally downgraded its profit guidance in October, Heineken reported a pretty good set of FY19 results. The figures were pushed up by a strong Q4 vs. Q3 figures (especially on volume: +4.1% vs. +2.3%). Concerning the bottom line, we see input costs providing some gentle relief on margins for FY20 compared to FY19. While 2019 was Carlsberg’s year, we should expect that 2020 should be Heineken’s one.
Unimpressive Q3 and FY19 operating profit guidance at the low end of the previously given range (4% expected vs. mid single-digit previously). However, in our view, not so bad, as we expected a worse scenario. New growth target already included in the consensus.
While the top-line remains strong, aluminum prices and bad European weather unexpectedly hit the operating profitability of the group. We will downgrade our expectations for the year.
Despite the later timing of Easter, Heineken reported Q1 volume growth beating analysts’ expectations (+4.3% organically, vs. +3.3% expected).
Our concerns following the H1 profit warning of Heineken have been swept by its highly reassuring FY18 results. The Heineken brands continue their expansion and the premium/craft brands are still growth drivers.
We are confident of the company’s ability to reach its FY19 guidance.
Q3 trading update: Beer volumes grew organically by +4.6% (consensus +4.3%).
Volumes by region: Africa, ME & EE +3.1%, the Americas +8.1%, Asia Pacific +4.8%, Europe +2.2%.
Heineken brand’s volumes grew by an impressive +9.2% in Q3 driven by Brazil, South Africa, Russia, Poland, the UK, Canada and Mexico.
FY guidance is maintained.
The guidance cut comes as the main disappointment. On the top-line side, the H1 results seem to be running well.
Q1 update: Consolidated beer volume was up +4.3% (cons. +4.8%). Heineken brand volume was up a strong +8%.
Organic beer volume performance by division: Africa, the Middle East and Eastern Europe +6.1% (cons. +7.8%), Americas +6.8% (cons. +4.1%), Asia Pacific +11.3%, Europe -1.7% (cons. +1%).
By most important markets, Nigeria saw beer volume decline by a high single-digit. This performance was more than offset by a strong Russia, South Africa, Ethiopia and Ivory Coast all of which posted doubl
The group finished the year with strong Q4 results, driven by Asia, Africa ME& EE and Mexico.
Although the FY18 guidance is somewhat below our estimates, we see the underlying business as solid. We keep our Add recommendation.
Q3 trading update: Beer volumes grew organically by +2.5% (consensus +2.8%).
Volumes by region: Africa, ME & EE +8.8% (cons. +3.5%), the Americas +2.9% (cons. +4.7%), Asia Pacific +12.2% (cons. +9%), Europe -2.8% (cons.-0.5%).
Heineken brand’s volumes grew +3.4% in Q3 driven by Brazil, South Africa, Russia and Mexico.
The FY guidance is maintained.
H1 update: Organic revenue is up +5.7% (cons. 4.2%) with beer volumes up +2.6% (cons. 1.8%, Q2: +4.2%) and revenue per hl up +3.4%. On a reported basis, sales were up +3.8% in H1, whereas the operating margin beia expanded to 17.2% (+34bp) in spite of margin contraction in Africa (-190bp due to the Nigerian naira but up on an organic basis).
OG by region: Africa, ME & EE +11.5% (driven by stronger pricing), the Americas +6.3%, Asia Pacific +4.5%, Europe +3.6%.
The Heineken brand’s volumes were
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Q3 beat, FY21 sales guidance upgrade, no change in the FY21/mid-term margin guidance are the ingredients of a very successful cocktail for Nestlé, which is definitely the best placed (amongst other food players) to ride out cost pressures.
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